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Upward immobility of CBN Deputy Governors 07 Oct 2017

This article was first published in Financial Nigeria magazine, March 2014 edition.

If the Senate goes ahead to confirm the appointment of Mr. Godwin Emefiele as Governor of Central Bank of Nigeria, it means Dr. (Mrs.) Sarah Alade, currently the Acting Governor, will step down to Deputy Governor. She will never become the Governor of the CBN. By the time Mr. Emefiele serves out his five-year term, Mrs. Alade would have retired, like Mr. Tunde Lemo did recently, after serving two terms of five years each as Deputy Governor.

This scenario is particularly concerning for the newly appointed Deputy Governor, Mr. Adebayo Adekola Adelabu. He has been appointed from a position of Executive Director at First Bank, in the influential role of Chief Financial Officer. If he remains at the institution, he has a fair chance of leading the bank when the current CEO, Mr. Olabisi Onasanya serves out his maximum 10 years in 2019. Thus, Mr. Adelabu has up to 15 more years to his banking career. The last ten could be as CEO. But now, if the Senate confirms his appointment, he heads into the last 10 years of his banking career. What is the implication of this on his career outlook and retirement plan before this appointment? We cannot assume that he accepts the limit on his career simply because he accepts his appointment as CBN Deputy Governor. It just happens that an unwritten code of not appointing a deputy governor as governor is what has become a tradition (at the CBN).

How about the erudite, upwardly mobile Dr. Kingsley Moghalu? By the time Emefiele serves out his first term, Moghalu would be the most senior Deputy Governor (if he gets a second term later this year). By the unwritten code, he will not rise to lead the institution he would have served for 10 years. It wouldn’t matter that he would have participated in 60 Monetary Policy Committee meetings. His outstanding contributions and leadership in driving the frameworks for financial system stability in the last five years would account for nothing. Whatever was invested in his training over the years would not matter. In the same way, Tunde Lemo’s experience with the two epochal regulatory regimes at the CBN was not a strong recommendation for his appointment as Governor. The oddity is in starker terms with Sarah Alade. She was in the best position to assure both the local and international investors on continuity of the assiduous pursuit of price stability by the CBN under Lamido Sanusi. Yet, with her six-year experience of superintending economic policy of the CBN as Deputy Governor, she was overlooked.

Since there is no law that forbids upward career mobility of the Deputy Governors within the central bank, and the fact that a tradition that undermines their career progression is now taking root, it is important to examine the situation more closely. The first point to raise is the lack of consensus candidate amongst the Deputy Governors when Lamido Sanusi declared he would not seek second term as governor. The media reported that the trio of Tunde Lemo, Sarah Alade and Kingsley Moghalu were all interested candidates for the position of CBN governor. One would hope that as the CBN evolves as an institution, it would be able to recommend a consensus candidate amongst the Deputy Governors to the President when the position of governor is to be filled. Such consensus candidate will make a better challenge for the coveted position.

But there is the geopolitical dynamics to the appointment of the CBN Governor. It appears untenable within our federal structure that a succession of two CBN governors should come from the same geopolitical zones. Indeed, the succession dynamic seem to only support alternation between the north and the south. As with every other position that is filled on the basis of “federal character”, there is in the selection process the propensity to overlook the best person for the job. This factor will further ensure that Kingsley Moghalu will not succeed Godwin Emefiele, because he is from the Southern part of the country where the Governor-designate also hails.

One of the advantages to upward mobility of a Deputy Governor of the central bank to the position of governor is that he or she would have imbibed the institutional culture for up to five years. The learning curve for an outsider-appointee in the role of governor will certainly be steeper. Like it was observed with Sanusi, there is the possibility of concentrating on the more familiar territory of banking supervision for a bank CEO coming in to head the central bank. Thus, serious engagement of monetary policy by Lamido Sanusi was thought to have been delayed. A disposition towards institutional culture is even more important than the time it takes to learn it. It would have been great to know Sanusi as a Deputy Governor of the CBN. If he had exhibited in that period his legendary disregard for the norms of governing a central bank, the government could have spared itself the embarrassment he caused it at different juncture by not appointing him as governor.

It appears the critical issue is that succession planning is hardly given any serious consideration when appointing a CBN Deputy Governor. But it should. Moreover, the functional independence of the central bank is not promoted when every five years a new governor starts with an induction into the institution, and then follows it up with a steep learning curve into the dynamics of monetary policy formulation as it was the case with Sanusi, and will definitely be the same with Emefiele.